Law of Contract. Liability for Breach. Last updated 14-May-2015

[W]hen the party by his own contract creates a duty or charge upon himself, he is bound to make it good, if he may, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract.
Paradine v Jane (1647) Aleyn, 26.

There are two standards of duty:

i) when liability for breach of contract is strict, and
ii) when it is based on fault in the sense of want of care, diligence or honesty.

Example of the first kind is a case of a buyer who cannot pay the price because, owing to complications arising out of a change in national exchange control law, he was unable to have necessary moneys as its disposal by the date fixed for completion of sale, after time had been made of the essence of the contract.

Liability based on exercising of due care only can be illustrated by a duty of a car repairer to take reasonable care of the customer’s car. As Sir Shirley Worthington-Evans said:

I have no hesitation in finding that the defendants failed to show that they ''had taken reasonable care of the plaintiff's property. I am satisfied that the electric wiring of their premises was faulty in design and was not properly inspected or maintained, and accordingly they are in breach of their duty as bailees of the plaintiff's property.

… there could be no doubt that this is an absolute stipulation to provide a full cargo of guano, and, however he may be prevented from doing so, the defendant would be bound by this stipulation.
Hills and Another v Sughrue (1846) 15 M & W 253; per Parke B at p 261.

Depending on a standard of duty which a party has agreed to assume under the contract he may find himself liable for breach even "without what one might call fault on their part". Duties of this kind are strict and were described by Lord Edmund-Davies in Raineri v Miles [1981] AC 1050 at 1086 as below:

It is axiomatic that, in relation to claims for damages for breach of contract, it is, in general, immaterial why the defendant failed to fulfil his obligation, and certainly no defence to plead that he had done his best.

Examples of strict liabilities are: duty of the seller to make delivery, duty of the buyer to pay price for the goods, duty of the charterer to provide cargo and duty of the shipowner to provide a seaworthy vessel under the common law. Some obligations not absolute under the common law can be made strict by express provisions in contract, e.g. Charterers’ obligation to pay hire in advance. The general rule is that liability is strict.

To avoid strict liability for breach which happened by reason of matters beyond their control, the parties can modify contract by inclusion for example, a "force majeure" clause. See for example such clause in Sugar charter party 1969:

Strikes or lockouts of men, or any accidents or stop-pages on Railway and/or Canal, and/or River by ice or frost, or any other force majeure causes including Government interferences, occurring beyond the control of the Shippers, or Consignees, which may prevent or delay the loading and discharging of the vessel, always excepted.

It shall be noted that strict liability may and usually does go together with liability for negligence, i.e. a common carrier of goods is strictly liable for goods if they are lost or damaged even without his fault, but he would also be liable when goods lost or damaged due to his negligence. When there is a general exemption or limitation clause incorporated in contract it will be construed so as to cover strict liability only and not applicable as a defence against negligence. In example with a common carrier of goods a clause exempting him from liability "for loss or damage" would be construed to refer to his strict liability only and would not cover liability for negligence.


[W]hen it has been once determined that there is evidence of negligence, the person guilty of it is equally liable for its consequences, whether he could have foreseen them or not.
In Smith v London and South Western Rail Co (1870) LR 6 CP 14 per Channel, B
Lack of due diligence is negligence …
The Amstelslot [1963] 2 Lloyd’s Rep. 223 per Lord Devlin at 235.

Where a contract provides for supply of services only, such for example as solicitors, architects or doctors, where no guaranteed results possible to achieve, it is usually imposes duty of care only. This standard of duty limits person’s undertaking in performing his services to one of exercising of reasonable care and skill. A suitable example can be found in section 13 of the Supply of Goods and Services Act 1982 which states:

In a contract for the supply of a service where the supplier is acting in the course of a business, there is an implied term that the supplier will carry out the service with reasonable care and skill.

In instances when risks of negative outcome is very hard to ascertain a duty to exercise reasonable care and skill can be discharged even when services provided resulted in dramatically negative results. This is so, because it was held that to establish negligence it is insufficient to rely on the doctrine of res ipsa loquitur (quotes about res ipsa loquitur), but exceedingly strong evidence would be required.

See also Concept of Due Diligence

In cases when contracting party is liable only when it fails to exercise due diligence or care, or in other words is liable only for negligence, it was deemed that general exclusion clause necessarily covers negligence as the only liability which that party agreed to incur. That was based on principles stated by Scrutton LJ in Rutter v Palmer [1922] 2 K.B. 87 at p.92:

…if the only liability of the party pleading the exemption is a liability for negligence, the clause will more readily operate to exempt him.

However in Hollier v Rambler Motors (A.M.C.) Ltd [1972] 2 Q.B. 71 it was explained that even in such cases clause must make it clear that liability for negligence is to be excluded. In that case a customer's car sent for repairs was damaged in a fire while it was in custody of car repair company. Fire was caused by repair company negligence. Salmon LJ clarified this rule in the following words:

It is well settled that a clause excluding liability for negligence should make its meaning plain on its face to any ordinarily literate and sensible person. The easiest way of doing that, of course, is to state expressly that the garage, tradesman or merchant, as the case may be, will not be responsible for any damage caused by his own negligence. No doubt merchants, tradesmen, garage proprietors and the like are a little shy of writing in an exclusion clause quite so bluntly as that. Clearly it would not tend to attract customers, and might even put many off. I am not saying that an exclusion clause cannot be effective to exclude negligence unless it does so expressly, but in order for the clause to be effective the language should be so plain that it clearly bears that meaning. I do not think that defendants should be allowed to shelter behind language which might lull the customer into a false sense of security by letting him think - unless perhaps he happens to be a lawyer - that he would have redress against the man with whom he was dealing for any damage which he, the customer, might suffer by the negligence of that person.

Liability for damage through the fire caused by negligence of the charterers’ servants in Re Polemis and Furness, Withy & Co, Ltd [1921] All ER Rep 40 was held to fall outside of charterparty clause mutually excluding liability "loss or damage from fire on board". In that case the shipowner was a common carrier who was strictly liable without fault, therefore mutual exception was not available to him, where only clear words would exclude negligence. The Court of Appeal saw no reason why a different rule of construction of this exception contained in the charterparty should be adopted in the case of the charterer than would undoubtedly be adopted in the case of the shipowner.


… it is evident that the master cannot be liable for not teaching the apprentice if the apprentice will not be taught.
Raymond v Minton (1866) L. R. 1 Ex. 244.

 

There is no breach committed when someone buys a theatre ticket but does not go to see performance. This is an example of so-called unilateral contract, i.e. a contract in which one side, in our case a person who bought a ticket, does not make any counter-promise to act, i.e. fact of a ticket purchase does not attach an obligation to attend the performance, it is therefore at purchaser’s discretion whether to go to there or not. (Read more about bilateral and unilateral contacts)

In case of bilateral contract, which is exchange of counter-promises constituting mutual obligations, some failures expressly excluded from the scope of one or both parties’ duties. A good example of such provision is well known ‘mutually excepted’ clauses in bill of lading and charterparty contracts. Apart from the said failures a non-performance can be excused when it is lawful. For instance, when the buyer lawfully rejects the goods because they are defective, and refuses to pay for them, he is not in breach of contract. A prior breach of contract by the seller automatically discharged him from his obligation to pay price for the goods, unless he elects to accept them.

In yet another category of cases when without fault from either side a supervening event brings the contract to an end, the parties may be excused from further performance under the doctrine of frustration.

Finally, there are cases where performance prevented by an event specified in so-called "force majeure" clause. The party relying on this provision should commit no fault and event occurred should be beyond of control of this party.


Arcos Ltd v Ronaasen & Sons Ltd [1933] AC 470

Barrie v Peruvian Corpn. (1896) 2 Com Cas 50

Canada SS. Lines Ltd v The King [1952] AC 192

Hollier v Rambler Motors (A.M.C.) Ltd [1972] 2 Q.B. 71

Inca Compania Naviera S.A. and Commercial and Maritime Enterprises Evanghelos P. Nomikos S.A. v Mofinol, Inc. (The President Brand), [1967] 2 Lloyd’s Rep 338

Raineri v Miles [1981] AC 1050

Re Polemis and Furness, Withy & Co, Ltd [1921] All ER Rep 40

Rogers v Snow (1573) Dalison 94

Rutter v Palmer [1922] 2 K.B. 87

Stafford v Conti Commodity Services Ltd [1981] 1 All ER 691

Universal Corporation v Five Ways Properties Ltd [1979] 1 All ER 552


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